Music streaming service Saavn close to raising up to Rs 240 crore

Music streaming service Saavn is close to raising $30-40 million (Rs 180-240 crore) in a deal that will likely be led by Hong Kong-based hedge fund Steadview Capital, according to people aware of the development.

New York-headquartered Saavn, which claims a catalogue of 1.1 million songs, is backed by Tiger Global Management and a few angel investors. ET could not ascertain further financial details.

"We're not able to comment on the investment just yet," said Saavn representative by email. Steadview did not reply to emails seeking comment.

Saavn was founded in 2007 by venture development firm 212 Media and is led by CEO Vinodh Bhat. It earns money through advertisements on its free services and advertisement-free subscription. Earlier this year, Saavn tied up with record label T-Series, the company also has access to content from other major labels like Sony, Tips, Yash Raj, Universal, Warner, and EMI.

According to Comscore, Saavn had 1 million visitors in June, while rival streaming services like Raaga had 1.3 million visitors and Gaana had 1.7 million visitors.

But users are now increasingly accessing these services through mobile apps and social networks like Facebook. Another player in the space is Hungama.com, which raised $40 million (Rs 240 crore) from Bessemer Venture Partners earlier this month.

The company had an advantage due to its access to music from record label T-Series. However others have also gained a similar advantage. Gaana.com -a division of Times Internet, which is part of the Times group, the publisher of this newspaper-has also integrated Radio Mirchi into its product, along with curated playlists for different moods, like workout playlists or Diwali playlists. "Digital Music broadcasting is growing fast, and in a country with the fastestgrowing mobile smartphone market, the opportunity is just beginning to evolve," said Pawan Agarwal, business head at Gaana.com.

Music streaming mobile services is not only gaining listeners but are also growing in revenue.

The digital music market is expected to grow to $9 billion Rs 54,000 crore) worldwide in 2014, said a research study by Mahindra Comviva and Ovum Consulting.

"Strong growth is driven by the expansion of international and regional music brands as well as active smartphone growth in South East Asia, India and Africa, all topping 20% CAGR," said the study.